blame socialism

What would we do without The New York Times? Without them, how would we ever figure out that what’s ultimately behind the economic crisis in Portugal isn’t bad banking or irresponsible lending or ill-thought-out fiscal policy, but in fact socialist housing law…

Portugal’s antiquated tenancy rules, for instance, stem directly from two revolutions that cemented leftist antagonism toward owners and landlords: the first was in 1910, which ended the monarchy, and the second was in 1974, which overthrew a dictatorship and returned Portugal to democracy.

The post-revolution rules helped protect tenants, but also led to a chronic shortage of rental housing. This, in turn, persuaded a new generation of Portuguese to tap recently into low interest rates and buy instead — often in new suburbs — thereby exacerbating the country’s mortgage debt and leaving Portugal with one of Europe’s lowest savings rates, of 7.5 percent.

“This system of controlled rents is a major problem for the Portuguese economy, but we will probably be waiting for a generational change to have room for institutional reform,” said Cristina Casalinho, chief economist of Banco BPI, a Portuguese bank. Beyond fueling housing credit, she added, the system “basically stops flexibility and mobility in the labor market because you can perhaps find a new job in another city but it will then be very difficult to rent a house there.”

So you see how this works? It’s not just that austerity measures have to be inflicted upon the state sectors of Europe. It’s that theses measures ought to be imposed, as the welfare state in fact bears the ultimate responsibility for the crisis, setting up the imbalanced markets that led directly to all the bad loans. Hmmm….

Yes exactly, but it’s becoming more and more random and scattershot. Next week undoubtedly there’ll be a piece in the NYT blaming the efficiency of the Spanish network for their problems – easier commutes mean larger houses mean more subprime loans, etc… So the strong state – rather than stupid decisions at BNP Paribas or whatever – is ultimately responsible for the crisis. Remove the rent controls / state support for low-income mortgages / public transportation networks / public educational systems and the banks would have and will behave themselves. Pernicious logic….

I understand your point regarding the NYT article’s hidden agenda, but the fact is that it accurately portrays a very very unfortunate situation, a truly historical economic disaster regarding housing in Portugal, following some “well intended” measures, by the way shared by fascism, “socialism” and social-democracy. Lisbon, for instance, has several thousand decrepit houses left to rotten because the owners couldn’t afford the maintenance let alone renovation works…

I definitely believe you. Even the rent control system that was in place in New York City when I lived there was a bit ridiculous, and while not as wide-reaching as what is going on in Lisbon, led to lots and lots of frustrating situations of that sort.

So I have no doubt that there’s probably a problem there. It’s just that the NYT is on a run of finding root causes for the financial crisis in social services / welfare programs rather than the more likely targets like financial deregulation and “state capitalism.”